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On Demand Businesses 101

Supply-Demand Conundrum: How Tookan Solves the Puzzle of Service Efficiency?

The ‘Uber for X’ business model has come a long way from being a mere disruption. Today, the model is being inculcated by enterprises across the globe looking to impart utility services in existing markets. Some have even gone beyond the convention and created markets for the services they have to offer. Thus, one can witness the emergence of an existing practice and an unprecedented trend pertaining to supply-demand. While the practice looks to cater to a demand with effective supply, the trend is to establish a demand for something that can be supplied. Today, it’s cool to have someone hired to walk your pet or fetch your groceries. Going back 10 years in time, it’s impossible for one to imagine a business model this simplified and diverse, let alone find it. Today, the thriving on-demand economy finds it economic basis in the principles of supply and demand. Surprisingly, the same basis also houses its biggest conundrum.

You want a meal, you order it. You want to travel, you opt for a cab service. If you can’t avail food from the first vendor, you turn to the second, and if you aren’t satisfied by the services of the existing enterprise, you uninstall its app, and move towards alternate options. Every move, every decision, and every atomic transaction within the ‘On-Demand’ spectrum is governed by the laws of the Supply-Demand chain. To implement these principles, an enterprise goes for service providers at various levels. For instance, a meal delivery service might have the local restaurant as the primary service provider and the logistics one as the secondary. Things get complicated if we go for an apparel service which might require three different service providers to procure, deliver, and facilitate the return of a product. In the ‘Gig Economy’, the expansion prospects are limitless, and to travel through this vast universe, an enterprise must rely on a spaceship fuelled by the service providers. Turns out, an enterprise can go as far as its service providers can. The question is, when and where are they required to go?

User behavior in terms of consumption can be termed as unpredictable. They might require a cab one rainy morning to work, and the next morning they might think against it. On the eve of Super Bowl, they want the meals to be delivered, and the day succeeding the Super Bowl, they might not want to even consider ordering food from outside. Shopping for groceries online might appeal to them the first week of the month, but they might consider walking to the store for the remaining weeks of the week. Each enterprise, from Uber to a laundry service catering to a single block within the NYC faces the Supply-Demand Conundrum. On a given day the demand might exceed the supply, and the other day, the supply might exceed the demand. In both the cases, it would all come down to how well can the enterprise manage its service providers. Basic economics, complemented with management would dictate the outcome on the front of customer satisfaction and revenue growth.

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Uber has a surge pricing model in place to tackle the situation where the demand exceeds supply. If the supply exceeds demand, customers are able to find a cab without any hassle, which is a win-win situation for the brand too. Contrary to what media has led many consumers to believe, surge pricing is not in play to charge the consumers more for the services they avail, but to keep the supply-demand model going. Divided into areas (Figure-1), drivers are shown the places where surge is applicable on their phones. Higher fares lead many drivers to move towards the surge region, and as the excessive demand is balanced by the supply of voluntary drivers moving into the area, the surge ends, thus sustaining the supply-demand model without having the user to pay an extravagant cost for the services for a longer period. However, Uber’s surge model has not yielded results as it should have. A study from Uber showcased how consumers tend to avoid availing the services during a surge, and there is no increased percentage of users and the ratio between the users on the app with the ride requests remains the same;  with only 2-3 out of 10 users agreeing to higher fares (Figure-2). In some countries, legal rulings have forced Uber to discontinue the surge pricing, leaving the idea to fall flat on its face. So, where does the solution lie for the effective management of service providers?

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In developing economies and densely populated areas, enterprises face numerous challenges when it comes to the performance and efficiency of their service providers. Many startups crashed out of the market last year in 2016 due to the failure of their service providers to up the ante when it came to customer expectations. If one had to write the obituary of the startups that perished last year across the world, it would be hard to miss out the despicable performance of the service providers. In India, grocery delivery services couldn’t match up the surge in demand and had to bow out of the competition, even when it had some renowned celebrities aboard its lavish PR Campaign. Many cab services have often reported how their drivers waste critical time driving from one place to another. The story with delivery services has been no different as many personnel tend to take longer time for deliveries than usual, thus disrupting the demand chain with an inefficient supply. Eventually, all this amounts to a weakened functioning of the enterprise, spelling doom for its prospects of market expansion and growth. This is where Tookan comes into play.

Tookan doesn’t only help an enterprise manage its service providers, but also brings efficiency and economics to the table. Why have your delivery personnel complete a single order in an hour when they can complete three? Why can’t your logistics personnel go for an increase in the number of deliveries for a given day?

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Tookan uses automated task assignment to make your service providers more productive in their functioning. Taking the example of an ecommerce venture which is required to complete at least hundred deliveries each day within a city to avoid any delays. Ideally, it would require its delivery personnel to have their routes sorted before they go out to make the deliveries. However, what if another batch of products to be delivered arrives at different warehouses within the same city during the noon when the personnel are already out? Tookan can track where the personnel are at that instant, and assign them their respective warehouse and addresses from where they can procure the product and deliver it. The assignment would depend upon where the personnel’s location, address where the product is to be delivered, and the number of deliveries that are to be made. Unlike before, the delivery personnel are not required to be manually updated about their next assignments and can simply move to their next task.

The story of the ecommerce venture is just one case study. With Tookan, the opportunities are limitless, especially if one is working in a city like New York or London, given how Tookan uses Google Maps API integration for effective Route Integration.

Coming back to our story of the delivery personnel where the number of deliveries being made does add to the credibility of the brand. Often, consumers complain of delays in delivery time with one enterprise, and this sour experience becomes their motivation to conduct business with an alternate organization. For any on-demand enterprise, every atomic transaction holds the key to unprecedented success and growth.

With Tookan, you are no longer required to worry about the complexities in the supply-demand aspect of your business as it amalgamates the aspirations of your business with the expectations of your consumers.

Eventually, it is all about bridging that critical gap between the supply and demand, and this is where Tookan can help you find success.

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